Ofcom sets new broadband price margin rules for BT

British communications watchdog Ofcom confirmed on Wednesday that it's imposing new rules on British Telecommunications (BT), which are set to regulate the margin between BT’s wholesale and retail superfast broadband prices.

"Superfast broadband forms a growing part of the overall broadband market and we expect it to become more important, with take-up increasing over the next couple of years,“ Ofcom says.

"Ensuring that there is effective retail competition in superfast broadband is therefore important to maintaining the UK’s competitive retail broadband market, which benefits consumers.“

The number of households taking up BT's fibre connections has risen more than 3.7 million since Ofcom introduced the requirement for BT to allow other operators to use its network, with providers often offering speeds of up to 79Mbit/s, Hexus reports.

The industry is now investing in upgrading the infrastructure to provide 'ultrafast' broadband services that will establish speeds of up to 1Gbit/s.

"Communication providers have access to BT’s next generation, superfast broadband network through a wholesale product called Virtual Unbundled Local Access (‘VULA’),“ Ofcom added.

"We are concerned that BT could distort the development of competition in superfast broadband by setting an insufficient margin between its wholesale VULA and retail superfast broadband prices. Therefore, this statement sets out detailed requirements on the minimum margin that BT must maintain.“

The new regulations should kick into action from 1 April Ofcom said, adding that BT would currently pass the test.

The regulator said it is confirming the new rule after receiving comments from the European Commission, and clarified that it will take into account changes to how BT distributes and charges for its sport content including the Champions League.